ABIDA MOHAMMED RAKHANGI, MUMBAI V. ITO WD 18(2)(4), MUMBAI

ITA 775/MUM/2014

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 7015 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 4 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-06-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 01-03-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 03-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH KUMAR YADAV
• Section: 68

Judgement Text

P A G E | 1 ITA NO. 775/MUM/2014 AY. 2008 - 09 LATE SMT. ABIDA MOHMMAD RAKHANGI VS. ITO - 18(2)(4) IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, M UMBAI BEFORE SHRI G.S.PANNU, AM AND SHRI RAVISH SOOD, JM ITA NO. 775 /MUM/201 4 ( / ASSESSMENT YEARS:2008 - 09 ) LATE SMT. ABIDA MOHAMMED RAKHANGI (THROUGH L/HEIRS S/SSH. MUKHTIAR RAKHANGI, AZIM RAKHANGI & SALIM RAKHANGI, C/O RAKHANGI GAS SERVICE, 22, MUSLIM CEMETRY, S.B. MARG, NEAR RAKHANGI CHOWL, LOWER PAREL. MUMBAI - 400013 / VS. ITO - 18(2)(4), ROOM NO. 109, 1 ST FLOOR, PIRAMAL CHAMBERS, LALBAUG, P AREL, MUMBAI - 400012 ./ ./ PAN NO . AABPR1071K ( / APPELLANT) : ( / RESPONDENT ) / APPELLANT BY : SHRI DHARAN GANDHI , A.R / RESPONDENT BY : SHRI RAJESH KUMAR YADAV , D.R / DATE OF HEARING : 07 .0 6 .2018 / DATE OF PRONOUNCEMENT : 08 .06.2018 / O R D E R PER RAVISH SOOD, JUDICIAL MEMBER: THE PRESENT APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A) - 19, MUMBAI, DATED 18.12.2013 WHICH IN ITSELF ARISES FROM THE ORDER PASSED BY THE A.O UNDER 271(1)(C) OF THE INCOME TAX ACT, 1961 (FOR SHORT ACT), DATED 24.06.2011 FOR AY 2008 - 09. P A G E | 2 ITA NO. 775/MUM/2014 AY. 2008 - 09 LATE SMT. ABIDA MOHMMAD RAKHANGI VS. ITO - 18(2)(4) 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE HAD FILED HER RETURN OF INCOME FOR A.Y 2008 - 09 ON 27.10.2008 , DECLARING TOTAL INCOME OF RS.2,63,196/ - . THE CASE OF THE ASSESSEE WAS THEREAFTER TAKEN UP FOR SCRUTINY ASSESSMENT UNDER SEC. 143(2). DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, IT WAS OBSERVED BY THE A.O THAT THE AIR INFORMATION RECEIVED BY HIM REVEALED THAT THE ASSESSEE WAS MAINTAINING A B ANK ACCOUNT WITH KOKAN MERCANTILE COOPERATIVE BANK LIMITED. IT WAS NOTICED BY THE A.O THAT THE SAID BANK ACCOUNT WAS NOT DISCLOSED BY THE ASSESSEE IN HER RETURN OF INCOME. THE DETAILS OF THE SAID BANK ACCOUNT WERE CALLED FOR BY THE A.O FROM THE BANK UNDER SEC.133(6) OF THE ACT. THE BANK IN ITS REPLY PLACED ON RECORD A COPY OF THE ACCOUNT OPENING FORM AND BANK STATEMENT OF ACCOUNT NO. 4699 OF THE ASSESSEE. THE ASSESSEE ON BEING CALLED UPON TO EXPLAIN THE ACCOUNT TRANSACTIONS IN THE SAID BANK ACCOUNT, HOWEVER FAILED TO PUT FORTH AN EXPLANATION AS REGARDS THE SAME. RATHER, THE ASSESSEE DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS SUBMITTED A COPY OF A LETTER FROM BMC BANK AND KMC BANK REGARDING DEPOSIT S, CASH SUMMARY AND BANK SUMMARY. STILL F URTHER, THE ASSE SSEE VIDE HER LETTER DATED 16.12.2010 FURNISHED WITH THE A.O THE DETAILS OF THE INTEREST INCOME OF RS.3,68,880/ - WHICH WAS EARNED BY HER DURING THE YEAR UNDER CONSIDERATION AND OFFERED THE SAME FOR TAX , AS UNDER: YEAR OF DEPOSIT DEP. NO. DEP. AMOUNT MATU RITY AMOUNT INTEREST WHICH WAS NOT INCORPORATED 2004 - 05 (KMC) FCR/29786 250000 292424 42424 2004 - 05(KMC) FCR/47146 200000 251490 51490 2004 - 05 (KMC) FCR/47142 200000 246617 46617 2004 - 05 (KMC) FCR/47143 200000 246617 46617 2004 - 05 (KMC) FCR/47144 200000 246617 46617 2004 - 05 (KMC) FCR/47145 200000 246617 46617 2006 - 07 (BMC) FCR5507/64197 500000 544398 44398 2006 - 07 (BMC) FCR 3815/10427 500000 544100 44100 TOTAL 368880 3. THE A.O FURTHER GATHERED ON THE BASIS OF THE INFORMATION FURNISHED BY KOKAN MERCANTILE COOPERATIVE BANK LIMITED THAT THE ASSESSEE APART FROM THE AFOREMENTIONED DEPOSITS WAS ALSO HOLDING ONE MORE FDR WITH THE SAID B ANK , AS UNDER: P A G E | 3 ITA NO. 775/MUM/2014 AY. 2008 - 09 LATE SMT. ABIDA MOHMMAD RAKHANGI VS. ITO - 18(2)(4) YEAR OF DEPOSIT DEP. NO. DEP. AMOUNT MATURITY AMOUNT 27.07.2007 FCR/49943 2,69,284 2,72,088 THE A.O OBSERVING THAT THE SOURCE OF THE INVESTMENT MADE BY THE ASSESSEE IN THE AFOREMENTIONED FDR WAS ALSO NOT DISCLOSED IN HER RETURN OF INCOME, THUS TREATED THE MATURITY AMOUNT OF RS.2,72,088/ - AS HER UNDISCLOSED INCOME FOR THE YEAR UNDER CONSIDERATION. APART FROM A BOVE, IT WAS FURTHER GATHERED BY THE A.O THAT AS PER THE BANK STATEMENT OF KOKAN MERCANTILE COOPERATIVE BANK LTD THE ASSESSEE WAS ALSO IN RECEIPT OF INTEREST INCOME TO THE TUNE OF RS.37/ - , HENCE THE SAME WAS ALSO ADDED BY THE A.O TO THE TOTAL INCOME OF THE ASSESSEE . ON THE BASIS OF THE AFORESAID DELIBERATIONS THE A.O MADE AN ADDITION OF RS.6,41,005/ - [ RS.2,72,088/ - (+)RS.3,68,880/ - (+)RS.37/ - ] AS THE UNDISCLOSED INCOME OF THE ASSESSEE UNDER SEC. 68 OF THE ACT. THE ASSESSEE ACCEPTED THE ADDITIONS MADE BY THE A.O AND DID NOT CARRY THE MATTER ANY FURTHER IN APPEAL, WHICH THUS ATTAINED FINALITY. THE A.O WHILE FRAMING THE ASSESSMENT ALSO INITIATED PENALTY PROCEEDINGS UNDER SEC. 271(1)(C) OF THE ACT. . 4 . THE A.O AFTER THE CULMINATION OF THE ASSESSMENT PROCEEDINGS , BEING OF THE VIEW THAT THERE WAS A DISHONEST INTENTION ON THE PART OF THE ASSESSEE TO CONCEAL HER INCOME OR FURNISH INACCURATE PARTICULARS OF INCOME, THUS IMPOSED A PENALTY OF RS.1,98,070/ - UNDER SEC.271(1)(C) OF THE ACT. 5 . AGGRIEVED, THE AS SESSEE ASSAILED THE PENALTY IMPOSED BY THE A.O UNDER SEC. 271(1)(C) BEFORE THE CIT(A). THE CIT(A) NOT BEING PERSUADED TO SUBSCRIBE TO THE CONTENTION S ADVANCED BY THE ASSESSEE THAT NO SUCH PENALTY WAS LIABLE TO BE IMPOSED ON HER, DISMISSED THE APPEAL. 6 . THE ASSESSEE BEING AGGRIEVED WITH THE ORDER OF THE CIT(A) SUSTAINING THE PENALTY IMPOSED BY THE A.O UNDER SEC. 271(1)(C) , HAD CARRIED THE MATTER IN APPEAL BEFORE US. THE LD. AUTHORIZED REPRESENTATIVE (FOR SHORT A.R) TOOK US THROUGH THE FACTS OF THE CASE. IT WAS SUBMITTED BY THE LD. A.R THAT THE ASSESSEE , SINCE DECEASED, BEING AN ILLITERATE LADY OF 75 YEARS OF AGE HAD INADVERTENTLY OMITTED TO FURNISH THE DETAILS OF THE AFORESAID BANK ACCOUNT S AND THE CORRESPONDING INCOME IN HER RETURN OF INCOME FOR THE YEA R UNDER P A G E | 4 ITA NO. 775/MUM/2014 AY. 2008 - 09 LATE SMT. ABIDA MOHMMAD RAKHANGI VS. ITO - 18(2)(4) CONSIDERATION . THE LD. A.R IN ORDER TO DRIVE HOME HIS CONTENTION THAT IN THE BACKDROP OF THE FACTS OF THE CASE NO PENALTY UNDER SEC.271(1)(C) WAS LIABLE TO BE IMPOSED ON THE ASSESSEE RELIED ON A HOST OF JUDICIAL PRONOUNCEMENT S . THE LD. A.R PLACE D H EAVY RELIANCE ON THE ORDER OF A COORDINATE BENCH OF THE TRIBUNAL PASSED IN THE CASE OF S. BADRI VS. ITO (2016) 47 CCH 133 (CHENNAI). THE LD. A.R FURTHER SUBMITTED THAT EVEN OTHERWISE THE A.O HAD WRONGLY ASSUME D JURISDICTION AND IMPOSED PENALTY UNDER SEC. 2 71(1)(C) IN THE HANDS OF THE ASSESSEE. THE LD. A.R TAKING US THROUGH THE COPY OF THE SHOW CAUSE NOTICE ( FOR SHORT SCN ) ISSUED BY THE A.O UNDER SEC. 274 R.W.S 271 OF THE ACT, DATED 27.12.2010 SUBMITTED THAT AS THE A.O HAD FAILED TO STRIKE OFF THE IRRELE VANT DEFAULT IN THE NOTICE AND RESULTANTLY FAILED TO POINT OUT THE DEFAULT FOR WHICH THE ASSESSEE WAS BEING CALLED UPON TO SHOW CAUSE AS TO WHY THE PENALTY UNDER SEC. 271(1)(C) MAY NOT BE ON HER , HAD THUS ERRONEOUSLY ASSUME D J URISDICTION AND PROCEEDED WITH A ND IMPOSED PENALTY UNDER SEC.271(1)(C) IN THE HANDS OF THE ASSESSEE. IT WAS THE CONTENTION OF THE LD. A.R THAT AS THE ASSESSEE WAS NEVER PUT TO NOTICE AS REGARDS THE DEFAULT FOR WHICH THE PENALTY WAS SOUGHT TO THE IMPOSED ON HER, HENCE SHE REMAINED DIVE STED OF ANY OPPORTUNITY TO EXPLAIN THAT NO SUCH PENALTY WAS LIABLE TO BE IMPOSED ON HER. 6. PER CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE (FOR SHORT D.R) RELIED ON THE ORDER S OF THE LOWER AUTHORITIES. IT WAS SUBMITTED BY THE LD. D.R THAT THE A.O HAD R IGHTLY ASSUME D JURISDICTION AND HAD VALIDLY IMPOSED PENALTY UNDER SEC. 271(1)(C) KEEPING IN VIEW THE MERITS OF THE CASE, WHICH THEREAFTER WAS RIGHTLY UPHELD BY THE CIT(A). THE LD. D.R IN ORDER TO SUPPORT HIS CONTENTION TH A T THE PENALTY WHICH WAS VALIDLY IM POSED IN THE HANDS OF THE ASSESSEE COULD NOT BE STRUCK DOWN ON THE TECHNICAL GROUND THAT THE A.O HAD FAILED TO STRIKE OFF THE IRRELEVANT DEFAULT, RELIED ON THE FOLLOWING JUDICIAL PRONOUNCEMENT S : (I) M/S AIREN METALS PVT. LTD. VS. ACIT, CIRCLE - 4 , JAIPUR (ITA NO. 820/JP/2016; DT. 29.09.2017) (II) EARTHMOVING EQUIPMENT SERVICE CORPORATION VS. DCIT (ITA NO. 6617/MUM/2014; DT. 02.05.2017) P A G E | 5 ITA NO. 775/MUM/2014 AY. 2008 - 09 LATE SMT. ABIDA MOHMMAD RAKHANGI VS. ITO - 18(2)(4) (III). SANSUI STEEL PVT. LTD. VS. ITO - 7(2)( 2) (ITA NO. 1403/MUM/2015; DT. 30/11/2017) THE LD. D.R FURTHER RELIED ON THE JUDGMENT OF THE HONBLE HIGH COURT OF DELHI IN THE CASE OF CIT VS. ZOOM COMMUNICATION PVT. LTD. (2010) 191 TAXMAN 179 (DEL) TO FORTIFY HIS CONTENTION THAT IN THE BACKDROP OF THE FACTS OF THE CASE PENALTY WAS VALIDLY IMPOSED BY THE A.O . 7. WE HAVE HEARD THE AUTHORIZED REPRESENTATIVES FOR BOTH THE PARTIES, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD . WE HAVE PERUSED THE SCN, DATED 27.12.2010 , WHICH WAS ISSUED BY THE A.O UNDER SEC.274 R.W.S. 271 OF THE ACT. A PERUSAL OF THE SCN REVEALS THAT AS THE A.O HAD FAILED TO STRIKE OFF THE IRRELEVANT DEFAULT, HENCE THE ASSESSEE WAS NOT PUT TO NOTICE AS REGARDS THE DEFAULT FOR WHI CH S HE WAS CALLED UPON TO EXPLAIN AS TO WHY PENALTY UNDER SEC.271(1)(C) MAY NOT BE IMPOSED ON HER . WE ARE OF THE CONSIDERED VIEW THAT THE NON STRIKING OFF THE IRRELEVANT CHARGE IN THE SHOW CAUSE NOTICE NOT ONLY REFLECTS THE NON APPLICATION OF MIND BY THE A.O, BUT THE SAME SERIOUSLY DEFEAT S THE VERY PURPOSE OF GIVING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE AS CONTEMPLATED UNDER SEC. 274. WE FIND THAT THE DISTINCTION BETWEEN THE SAID TWO DEFAULTS HAD BEEN APPRECIATED AT LENGTH BY THE HONBLE SUPRE ME COURT IN ITS JUDGMENTS PASSED IN THE CASE OF DILIP & SHROFF VS. JT. CIT (2007) 210 CTR (SC) 228 AND T. ASHOK PAI VS. CIT (2007) 292 ITR 11 (SC) . THE HONBLE APEX COURT IN THE AFOREMENTIONED JUDGMENTS HAD CONCLUDED THAT THE TWO EXPRESSIONS NAMELY CONCEALMENT OF PARTICULARS OF INCOME AND FURNISHING OF INACCURATE OF PARTICULARS OF INCOME HAVE DIFFERENT CONNOTATION. WE FURTHER FIND THAT THE HIGH COURT OF KARNATAKA IN THE CASE OF CIT VS. SSAS EMERALD MEADOWS (73 TAXMANN.COM 241)(KAR), FOLLOWING I TS EARLIER ORDER IN THE CASE OF CIT VS. MANJUNATHA COTTON AND GINNING FACTORY (2013) 359 ITR 565 (KAR), HA S HELD THAT WHERE THE NOTICE ISSUED BY THE A.O UNDER SEC. 274 R.W SEC. 271(1)(C) DOES NOT SPECIFY THE LIMB OF SEC. 271(1)(C) FOR WHICH THE PENALTY PR OCEEDINGS HAD BEEN INITIATED, I.E WHETHER FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS, THE SAME HA S TO HELD AS BAD IN LAW. THE SPECIAL LEAVE PETITION P A G E | 6 ITA NO. 775/MUM/2014 AY. 2008 - 09 LATE SMT. ABIDA MOHMMAD RAKHANGI VS. ITO - 18(2)(4) (SLP) FILED BY THE REVENUE AGAINST THE AFORESAID ORDER OF THE H ONBLE KARNATAKA HIGH COURT HAD THEREAFTER BEEN DISMISSED BY THE HONBLE SUPREME COURT IN CIT VS. SSAS EMERALD MEADOWS (2016) 73 TAXMANN.COM 248 (SC). A SIMILAR VIEW HAD ALSO BEEN TAKEN BY THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF CIT VS. SAMSON P ERINCHERY (ITA NO. 1154 OF 2014; DT. 05.01.2017)(BOM). WE FURTHER FIND THAT T HE ISSUE INVOLVED IN THE PRESENT CASE IS ALSO COVERED BY THE ORDER OF A COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF MEHERJEE CASSINATH HOLDINGS PVT. LTD. VS. ACIT, CIRCLE 4(2 ), MUMBAI (ITA NO. 2555/MUM/2012; DATED 28.04.2017) , WHEREIN THE TRIBUNAL AFTER DELIBERATING AT LENGTH ON THE ISSUE UNDER CONSIDERATION IN THE BACKDROP OF VARIOUS JUDICIAL PRONOUNCEMENTS HA D CONCLUDED THAT THE NON - STRIKING OF F THE IRRELEVANT CHARGE IN THE NOTICE CLEARLY REFLECTS THE NON APPLICATION OF MIND BY THE A.O AND WOULD RESULTANTLY RENDER THE ORDER PASSED UNDER SEC. 271(1)(C) AS INVALID AND VOID AB INITIO. WE THUS, BEING OF THE CONSIDERED VIEW THAT AS THE A.O IN THE CASE BEFORE US, HA D FAILED TO STRIKE OFF THE IRRELEVANT DEFAULT IN THE SCN ISSUED TO THE ASSESSEE , THUS THE PENALTY IMPOSED BY HIM UNDER SEC. 271(1)(C) WITHOUT VALIDLY PUTTING THE ASSESSEE TO NOTICE AS REGARDS THE DEFAULT FOR WHICH SHE WAS BEING CALLED UPON TO EXPLAIN AS TO WHY PENALTY UNDER THE SAID STATUTORY PROVISION MAY NOT BE IMPOSED, CANNOT BE SUSTAINED AND IS LIABLE TO BE VACATED. WE MAY HEREIN OBSERVE THAT AS THE PENALTY IMPOSED UNDER SEC. 271(1)(C) HAS BEEN QUASHED BY US ON THE GROUND OF INVALID ASSU MPTION OF JURISDICTION BY THE A.O , THEREFORE , WE REFRAIN FROM ADVERTING TO AND ADJUDICATING UPON THE MAINTAINABILITY OF THE PENALTY ON MERITS. WE THUS, SET ASIDE THE ORDER PASSED BY THE CIT(A) AND DELETE THE PENALTY OF RS. 1,98,070/ - IMPOSED BY THE A.O UND ER SEC. 271(1)(C). 9. THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON 08 /0 6 /2018. SD/ - SD/ - (G.S. P ANNU ) (R AVISH SOOD ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; 08 .0 6 .2018 PS. ROHIT P A G E | 7 ITA NO. 775/MUM/2014 AY. 2008 - 09 LATE SMT. ABIDA MOHMMAD RAKHANGI VS. ITO - 18(2)(4) / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI